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Five suggestions for investing a tax refund

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Sometimes taking the money and putting it into an investment solution can be extremely lucrative

A tax refund can be a nice surprise and many may view it as the perfect opportunity to do a little shopping. However, prudent planning can often turn that refund into an incredible source of long-term wealth that could result in potentially hundreds of thousands of dollars down the road. With an average refund of $2,700, there’s a lot that can be done to see substantial returns over the long term.

Millennials typically see the largest refunds and have the most time to let the money work for them. The average refund for a millennial is about $3,013, compared to the $2,944 for those of Generation X and $1,943 for baby boomers. When the check is received, stop – think twice and consider one of five investment options.

Investing in an IRA, an individual retirement account, is an easy and great way to save for later. Plus, an IRA has the advantage of allowing for contributions to be taken out at any time – with no penalties incurred – as long as the investment earnings remain in the fund.

The refund can also be put into a 401(K), with a little bit of juggling. It isn’t possible to put the money directly into the fund, but it is possible to increase the monthly contribution amount to equal the refund amount (over 12 months) and add the refund to a regularly-used bank account. Discipline will ensure that everything continues to move forward according to plan.

Anyone with a little bit of investing experience could consider taking the refund and using it to invest in stocks, mutual funds and similar investment vehicles. There are investment apps today that make the process simple and painless, allowing traders to get the maximum out of their investments.

Similar to the investment apps, robo-advisors are available and can offer a range of diversified investment portfolios. Once an investor builds a portfolio, the robo-advisor uses sophisticated algorithms to manage the investment funds for low commissions. They are also required to adhere to the same regulations as human advisors, giving investors an extra level of comfort.

For those that are comfortable with their income levels and don’t necessarily believe they need an investment for themselves, they should think about their children. The tax refund can be used for a 529 plan, which can provide tax-free growth on contributions and the money can be used for qualified education costs. Since higher education can cost above $100,000 a year, this could be one of the smartest options.

Forex trading doesn’t have to be difficult

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Forex trading can give investors a great way to earn money

Foreign exchange (forex) trading is a huge market. Trillions of dollars in volume is traded each day on international markets and the combined volumes of the different forex markets are substantially higher than those of equity and other markets. While many investors still shy away from forex trading, getting involved is easier than most think.

Newcomers should first take a course in order to understand ideas such as trading pairs, foreign pips (the smallest amount by which the price value of a currency pair changes), minor/major pairs, order booking and more. There are plenty of online courses that can provide a basic overview of forex trading and help investors get started.

Forex trading is a long-term prospect. When making an investment, it’s better to be prepared to allow the investment to ride for a long period, helping to compensate for short-term volatility.

Take advantage of Google Alerts to be notified of targeted trends and news related to the investments. These alerts can also help monitor the movements of rates to react accordingly.

Creating simplified trading strategies will go a long way toward developing a workable solution. Simple, effective trading strategies are not only possible, but they can be achieved with just a basic understanding of the forex market.

Wherever possible, use online resources and opportunities to develop strategies. There are a number of affiliate opportunities and free demo accounts that provide bonus money to help new investors get started, but which can help create a better picture of how to manipulate the investments.

Combining even a little capital with preparation and training will go a long way toward creating a long-term wealth strategy. As with any investment, however, it’s always smart advice to not get involved in trades that have the potential for greater losses than you are willing to incur.